IMF obliges authorities to carry out key reforms

IMF obliges authorities to carry out key reforms

05/04/2017

Today the Ministry of Finance of Ukraine has released the text of the memorandum signed with the IMF upon which Ukraine will receive the next tranche equal to USD 1 billion. It should be noted that this document contains commitments of Ukrainian authorities to conduct a number of key reforms, including: reconsider of the pension system, the abolition of the land sale moratorium, reform of the law-enforcement agencies, etc.

Talking about commitment to pension reform, the Verkhovna Rada should adopt a new pension legislation by the end of April 2017. According to the memorandum, the reform provides new options for retirement with a wider range of retirement age; cost savings at least 3 percent of GDP, as of by means of increasing the effective employment record for retirement; guarantees of citizens receiving pensions lined up with paid dues. The new system of pension accounting is expected to work starting from January 1, 2018.

In terms of land reform, the Verkhovna Rada undertook a commitment to approve a draft law that will abolish the current moratorium on sale of agricultural land by the end of May this year. Thus, the sale of land will be possible since the end of 2017.

Also, by the end of April, the Verkhovna Rada should adopt a law to create a new civil service – financial police, which will carry out the investigation of financial crimes against the state. The new authority will be managed by the Ministry of Finance. Financial police will replace the current tax militia and gather all powers to combat financial crime in one agency avoiding duplication of functions.

One of the key issues of the memorandum is to create anti-corruption courts. The Verkhovna Rada should adopt appropriate laws by June 15, 2017. Also, the document states that Ukraine will work for acceleration of the privatization of state-own assets. In particular, the Verkhovna Rada plans to adopt amendments to the Law of Ukraine “On privatization” by the end of August this year. This should be done to improve transparency and preventive measures, and further optimization of the privatization process of medium size enterprises.

It should be noted that Ukraine undertook a commitment to carry out re-sale of “Odessa Portside Factory” and bring to a competition authoritative international investors. It is planned to complete this process during the first half of 2017. Also, the document contains information about plans to sell a large number of state enterprises, including PJSC “Centrenergo”, “Turboatom” PE “Ukrspyrt.”